In addition to announcing plans to cut 18,000 jobs, Microsoft confirmed on Thursday it will shut down Xbox Entertainment Studios (XES). This is the wing responsible for creating original content for the Xbox audience, including a Halo series executive produced by Steven Spielberg. With Microsoft’s focus narrowing in on cloud and mobile, there was no room left over for the company to go after companies like Netflix and Hulu.
In an internal memo justifying the news, Xbox chief Phil Spencer says the move is so Microsoft can streamline its portfolio and “remain committed to being a consumer-driven organization.” Spencer does say the Halo TV series will still see the light of day, alongside Signal to Noise, a documentary series. No further programming beyond that is being planned, however.
Xbox Originals debuted in June with a reality show called Every Street United, attempting to capitalize on World Cup fever. Outside of XES, Spencer says Microsoft will continue to deliver content like NFL on Xbox, along with the same app and live TV capabilities Xbox users are already familiar with.
Spencer ends his memo by saying closing down XES will help Microsoft better align its long-term goals of “mobile-first and cloud-first.” It’s a shame, really, since the company was only just getting started, but at least the Halo show will still come out. You can check out Spencer’s full memo below.
I hope you have had a chance to read today’s mails from Satya. I wanted to take a moment to share a few thoughts on what this means for our team and some of the changes we are making as a result.
In last week’s mail outlining some of the steps towards creating the culture and organization to bring our ambitions to life, Satya called out the strategic importance of Xbox as a strong consumer brand, a creative center for gaming and a leader in bold innovation. Every member of Team Xbox should be incredibly proud of the impact and reach your work has within the walls of Microsoft, with our developer community and most importantly, with consumers.
Microsoft is the productivity and platform company for a mobile-first and cloud-first world, and games are the single biggest digital life category in a mobile-first world. Success in this category, by growing a robust Xbox business, brings additional value to Microsoft. I have stated this before, but for Xbox to be successful, we must remain committed to being a consumer-driven organization with the mission of meeting the high expectations of a passionate fan base, to create the best games and to drive technical innovation.
As part of the planned reduction to our overall workforce announced today and in light of our organization’s mission, we plan to streamline a handful of portfolio and engineering development efforts across Xbox. One such plan is that, in the coming months, we expect to close Xbox Entertainment Studios. I would like to take this opportunity to recognize the accomplishments from the entire team in XES. They have built an impressive slate of original programming and pioneered interactive entertainment on Xbox, such as the innovative reality series ‘Every Street United’ that succeeded in uniting audiences around the globe during the recent World Cup. I am pleased that Nancy, Jordan and members of the XES team remain committed to new, original programming already in production like the upcoming documentary series ‘Signal to Noise’ whose first installment takes on the rise and fall of gaming icon Atari and of course, the upcoming game franchise series ‘Halo: Nightfall,’ and the ‘Halo’ Television series which will continue as planned with 343 Industries. Xbox will continue to support and deliver interactive sports content like ‘NFL on Xbox,’ and we will continue to enhance our entertainment offering on console by innovating the TV experience through the monthly console updates. Additionally, our app partnerships with world-class content providers bringing entertainment, sports and TV content to Xbox customers around the world are not impacted by this organizational change in any way and remain an important component of our Xbox strategy.
Change is never easy, but I believe the changes announced today help us better align with our long-term goals. We have an incredible opportunity ahead of us to define what the next generation of gaming looks like for the growing Xbox community. I have a great deal of confidence in this team and know that with clarity of focus on our mission and our customers we can accomplish great things together. We already have.
Thank you again for all you do for Xbox.